What is Social Commerce and Why Are Facebook Leading the Way?

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Social networks are used by billions across the world, many of whom spend hours a day on the various sites. With such a highly engaged user base, it seems to be an obvious space for brands to move into. And in terms of marketing, they’ve been doing so for a number of years. Increasingly, however, the major social media platforms are looking to integrate e-commerce features so that consumers can make purchases through them, acting as middlemen between their users and products. A move that has been perceived by many as a direct threat to the likes of Amazon and eBay, although it is still far too early in the day to gauge how successful it will be.

According to a new report from BI Intelligence, social media increased its share of e-commerce referrals by nearly 200% between the first quarters of 2014 and 2015. Facebook is the dominant platform for social commerce. In terms of driving mobile e-commerce traffic, it accounts for 1.32% of the total amount - making up 50% of total social referrals and 64% of total social revenue. The digital advertising market is a relatively small piece of the pie though, with its size in 2015 estimated by eMarketer to be in the region of $60 billion. Online commerce, on the other hand, is predicted to reach around $350 billion this year.

The introduction of Facebook’s new ‘Buy’ button, following a deal with e-commerce platform Shopify and a lengthy testing period, has been cited by many as game changing for social commerce. The tech behemoth is building shops with Facebook Pages, and installing a Buy button to enable the entire process to be carried out in one action, rather than following links away to other retailers.

Facebook is not the only firm making such a move. Google has also added a ‘Buy’ button, Pinterest and Instagram have announced plans to do so, and YouTube has rolled out TrueView for shopping to allow brands to add product listings alongside video ads. Facebook’s dominance in the arena is driven, in large part, by its tremendous user base. Pinterest, on the other hand, manages to drive 16% of social revenue, second only to Facebook, even though it’s audience is 6.5 times smaller than Twitter’s.

In terms of what these mean for companies’ social media strategies, it is clear that a shift will be required. While direct selling has, for many brands, been abandoned in favour of providing content and informing readers. This will need to be re-examined with this increasingly popular trend.